FLORIDA, Jan. 12 – The U.S. 11th Circuit Court of Appeals has remanded a bad faith case to the U.S. District Court for the Middle District of Florida, instructing it that a jury must decide whether Geico acted in bad faith relative to the settlement negotiations arising out of a road rage incident.
Geico’s insured, Moore, was involved in a road rage incident in Florida, resulting in his truck being bumped across the center line, causing it to strike and later kill motorist Amy Krupp. Geico promptly tendered its $20,000.00 policy limit to the lawyer representing Krupp’s estate, but failed to comply with counsel’s request for an affidavit of no other insurance, and a precisely worded release agreement.
Because Geico did not comply with the provisos relating to the affidavit or the release, settlement was not reached, and Krupp’s estate won a $4 million verdict against Moore. Moore then filed a bad faith suit against Geico in federal court in Florida. The district court, while conceding that Geico’s handling of the claim may have been “sloppy” and “bordering on negligent,” granted summary judgment for Geico, from which Moore appealed.
The 11th circuit reversed, finding that a jury question existed regarding the interplay between Geico and the Krupp estate’s lawyer. The Court was careful to agree with the trial court that negligence on the part of the insurer was not sufficient to make out a bad faith claim. It further, found, however, that there was conflicting evidence as to Geico’s conduct, and that negligence could be considered as part of the “totality of the circumstances” in the bad faith analysis.
The Court found that the trial court impermissibly made credibility determinations, most notably as to the deposition testimony of the lawyer for the Krupp estate, and that it ignored expert opinion proffered by the estate against Geico, both of which should have been considered by a jury. It also found that the district court was too focused on the possibility that Krupp’s counsel was engaged in a bad faith setup. The case was remanded for further proceedings.
Editor’s Note: There is a grave danger of converting the bad faith standard to a mere negligence standard when the Court takes negligence into account as part of the “totality of the circumstances.” Here, the 11th Circuit apparently held evidence of the possibly negligent handling of a settlement sufficient to subject an insurer to the rigors of a bad faith trial. There is an argument to be made also that if the trial court payed too much attention to the possibility of a bad faith setup by plaintiff’s counsel in granting summary judgment , the 11th Circuit payed far too little in reversing it.
For more information on how to protect your company from bad faith exposure arising out of allegations of simple negligence, reach me at firstname.lastname@example.org or 717-731-4800.